The European Commission launched its proposal for a common system of calculating the tax base of businesses operating in the EU. According to the Commission, the aim of this proposal is to significantly reduce the administrative burden, compliance costs and legal uncertainties that businesses in the EU currently face in having to comply with up to 27 different national systems for determining their taxable profits.

The problems identified by the Commission which require remedy in the form of the CCCTB include:

• variation of tax systems from one EU country to the next, which makes corporate tax compliance complicated and expensive for companies to operate in more than one country.
• small businesses in particular find it hard to take full advantage of the single market – set up to enable people, goods, services and capital to move freely throughout the EU.
• obstacles to doing business in the single market run counter to the EU's priorities for smart, sustainable and inclusive growth.

The Commission's proposal to create a CCCTB is designed to help businesses in more than one EU country to benefit from:

• a single set of rules for calculating how much tax they must pay covering all EU countries
• the ability to “consolidate”. If they earn a profit in one country but lose money in another, they can offset the profits against the losses and pay taxes on the net amount only
• healthier businesses leading to more jobs, better products and services, lower prices.

Under the plans set out by the Commission, CCCTB will mean that companies in the EU will be able to opt for the common consolidated corporate tax base (or stick with the different national systems), which will make the EU a true single market from the corporate tax perspective. Corporate tax rates in the EU will not change. EU countries will continue to decide on their own corporate tax rate. The detailed report issued by the Commission includes a discussion of the fundamental concepts for the calculation of the tax base, timing and qualification issues, how to deal with depreciation of fixed assets and losses, provisions on entry to and exist from the system, and a discussion on how to deal with consolidation and business reorganisations.

The Commission hopes that the proposals put forward will be adopted unanimously by EU Council by 2013, after consultation with the European Parliament. The Commission then hopes that EU countries will have transposed the proposal into national law two or three years after adoption by Council.

Details of the Commission's press release, the report itself and impact assessments supporting the report are available at http://europa.eu/rapid/pressReleasesAction.do?reference = IP/11/319&format = HTML&aged = 0&language = en&guiLanguage = en